The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

As a journalist, active trader, and daily blogger on the markets, I tend to read and watch everything I possibly can, while healthily ‘discounting’ at least 50% of the chatter.

Like you, I watched in semi-amazement as AAPL rocketed to what seemed like a new all-time high nearly every week, and the publicity-seeking calls for a $1000 price target.

I parsed out every word of noted Apple analyst Gene Munster of Piper Jaffray, and made the occasional weekly option play myself, with some success and some not so great trades to both sides.

But I have also watched and listened during this 20%+ decline on AAPL’s stock.

And heard the statements:

-“$670-675 is a buyable pullback.”

-“A good play for a solid bounce at $650-655”

-“The $600 level will hold and I would be an aggressive buyer there.”

-“Without a doubt, roll up the truck and buy hand over fist here at the $535-545 level.”

I also posted here on Forbes the somewhat amusing tweet from Kim Kardashian when Apple hit a major historic milestone back in August, 2012:

@Kim Kardashian “Wow RT Apple Becomes The Most Valuable Company in History”

(Schaeffer's Research at that time, with tongue well in cheek, intimated this might be a contrarian indicator: "When something goes this mainstream, caveat emptor.")

Last night I was watching a portion of Fast Money on CNBC and think that the usually very logical and straight-shooting Karen Finerman made the best comment of the night regarding Apple, saying in essence:

One needs to separate out Apple the business versus Apple the stock.

Now carry that to its logical extension and one wants answers to both questions: A) how is the business doing and what are the expectations going forward? and B) is the market going to respond rationally to valuing futures earnings growth or will AAPL stock trade more based off a herd mentality, whether that be up or down?

I think it might be instructive to take a quick pass on what some noted commentators/bloggers/columnists are currently saying regarding Apple.

Aaron Task of Yahoo Finance has a piece well worth reading, which covers both the publicly stated current negative arguments regarding the stock and his own rebuttals on the positive side. While making no “guarantees”, of course, he seems to conclude on a positive note:

Generally speaking, when a company is being vilified in the popular media like this, it's usually closer to the end of a decline vs. the beginning. As Apple bulls like to point out, the stock is cheap, trading with a trailing P/E of 12.3 and a forward P/E of less than 10 based on forecasted earnings for fiscal 2014. Both measures are well below the S&P 500 multiple, even as Apple is growing much faster than the index.

Doug Kass of Seabreeze Partners, and columnist for TheStreet.com, has a typically thoughtful piece first published Nov. 9, which takes one through a chronology of his bullishness, bearishness and now bullishness again regarding AAPL. A few points he makes:

The shares now stand at $536, and I am buying. Investors are no longer smug and have grown increasingly (and arguably fully) aware of the challenges of the delivery of current and future new products. Apple's shares are no longer the beneficiary of fund flows -- just the opposite has been occurring, which has materially pressured the shares down to attractive levels.

Clem Chambers, a Forbes contributor, published a piece yesterday titled “Is Apple Crashing?” in which he offers a variety of scenarios and ways to play the stock depending on level of holdings and certain risk management principles. His essential thesis?

Anyone holding any stock–but particularly ‘winners’ like Apple–should periodically ask themselves ‘Why do I hold this?’ Then check the facts…Highly-valued tech stocks do not obey old fashioned stock market laws. This is nothing new.

Technology venture capitalist Porter Bibb was interviewed yesterday on CNBC and sees “the beginning of a bull market” for Apple based on a raft of product-related reasons (Jon Najarian also disclosed recently he is long AAPL call spreads, which can always change in a flash of course).

Bibb, of Mediatech Capital Partners, said:

We’re at an inflection point right now, and Apple invented some of this market with the iPad, and they dominate the market with their iPhones. Smartphones around the world in the third quarter increased 50 percent over 2011, and only half of Americans who have cellphones have smartphones. It’s just the beginning of a bull market for these portable devices. …I like the fact that the company’s innovating, and I think there is after this downside — which I think is really exaggerated — that there should be a nice recovery in the name, particularly if you take a look at this long-term.

Michael Wolff, of USA Today, had a provocative and much noted article recently, “The Age of Apple May be Over.” (Similar to a comment earlier, some cynics are saying this broad media focus on AAPL's decline may be a contrarian indicator.) But Wolff is worth reading, saying in part:

Image via CrunchBase

How long do you get to stay on top? General Motors had three generations; IBM two; Microsoft one. Apple? ….The age of Apple should, reasonably, be a fleeting one. And this, in its way, is good news. Innovation happens in the technology business and new markets open when the mighty fall — often not until the mighty fall. A short run on top is long enough.

“Elliot Waver” technician Avi Gilburt had a story early today on MarketWatch, “Watching Apple for signs of a bottom.”

I would be watching AAPL very carefully over the next week or two for technical signals of bottoming in the cited region of 515-522. It could be a huge buying opportunity for AAPL, which may yet see new all-time highs early next year.

And while there is much much more out there-one can find virtually any Apple outlook one wants-we attempted to find the most recent broad comments from the aforementioned Gene Munster of Piper Jaffray, one of the most prominent Apple analysts. According to a New York Times blog near the end of last week, Munster’s comments were fairly simple and to the point:

It has just been wave after wave of bad news.

I will end this with my own two cents, for what it is worth. As “They” (veteran market-watchers) say, “Every gap on the charts will be filled sooner or later.” In the case of Apple, a big “chart gap” is staring out at the $430-$440 area from back in January of 2012. This is hardly a prediction, just a statement of fact. That would be a somewhat logical place for the stock to head in the event of a really significant overall market pullback on one of the relatively known “Grey Swans” or a totally new, and for now, unknown “Black Swan” event.

But of course that would also represent a decline of close to 40% from AAPL’s top this year and the penetration of three ‘century levels’ on the stock, which is awfully hard to envision. But are we crazy? If so, apparently we are not alone. Jeffrey Gundlach, CEO of DoubleLine Capital, has placed a downside target of $425 on the stock, according to the LA Times and others. Gundlach has many reasons but, in a nutshell, says:

The product innovator, as I've said over and over again, isn't there anymore.